MJIL Online

MJIL Online brings you timely short-form articles that represent a wide range of views on contemporary issues in international law. The views and opinions expressed in these articles are those of the authors only.


Erin Hoya
Vol. 39 Associate Editor
Emotions can provide valuable data by which to assess options. On the other hand, they can “can interfere with [the] ability to make rational judgments.”[1] While our feelings—particularly negative ones such as fear, anger, or disgust—serve us well as red flags, prompting us to examine issues with potential negative consequences more closely, their influence should generally be limited in decision-making. This is especially true in the case of judges, tribunals, and other authorities who bear the heavy responsibility of determining refugee claims that involve allegations of terrorism.

The case of Ahani v. Canada[2] illustrates how current decision-making approaches to allegations of terrorism in refugee law in several jurisdictions raise significant concerns for refugees and for the international refugee resettlement system overall. These concerns particularly emerge when considering cases under Article 1F(b)[3] of the 1951 Convention Relating to the Status of Refugees and its 1967 Protocol (hereinafter “the Refugee Convention”).[4] Ahani was an Iranian national whom Canadian officials alleged had served in the Iranian Ministry of Intelligence Security (MOIS), essentially, Iran’s secret service. Canadian intelligence services asserted MOIS both sponsored and undertook “a wide range of terrorist activities, including the assassination of political dissidents world-wide.”[5] Though Ahani was

Ian Marshall Sander
Vol. 39 Articles Editor

In 2010, FIFA awarded hosting duties for the 2022 World Cup to Qatar.[1] Beyond accusations of corruption[2] and the questionable wisdom of Qatar hosting an event traditionally hosted in the summer,[3] a prominent issue regarding Qatar and the World Cup concerned labor, specifically the plight of construction laborers in the Gulf state. Most of these laborers are migrant workers; indeed, migrant laborers compose the vast majority—approximately 95%—of Qatar’s labor force[4], with Bangladesh, India, Nepal, and the Philippines providing most of the foreign workers.[5]

Critics immediately raised concern over the fact that Qatar’s labor system failed to provide construction laborers working on World Cup projects with adequate rights and protections.[6] In fact, Qatari labor practices violated international labor standards.[7] As construction for the World Cup in Qatar began, reports out of Qatar confirmed that concern: laborers were suffering—and dying.[8] Today, over seven years after Qatar earned the hosting rights to the 2022 World Cup, the labor situation remains unacceptable. But recent action by the International Labour Organization (ILO) provides reason to be optimistic about positive change.

Qatar’s Violations of the Prohibition of Forced Labor:

Heightened scrutiny stemming from the World Cup highlighted Qatar’s failure to eradicate forced labor practices

The views and opinions expressed in this article are those of the author only.
Anna Rasmussen
Vol. 39 Associate Editor
In 2008, two vitamin C U.S. corporate purchasers brought a multi-district antitrust class action suit against two entities which were incorporated under Chinese law, Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation in the case of In re Vitamin C Litigation.[1] The plaintiffs allege that the defendants “conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market.”[2] The defendants argue that they were compelled to fix the quantity and price of vitamin C sold abroad under Chinese law.[3]

The court must determine whether the laws of China in fact did compel the defendants to engage in this behavior in violation of U.S. anti-trust law.[4] The Ministry of Commerce of the People’s Republic of China submitted an amicus curiae brief on behalf of the Chinese Government stating that the laws of China required the defendants to engage in quantity-fixing and price-fixing of vitamin C sold to the U.S.[5] The district court ruled that the law of China did not require the defendants to engage in price-fixing in violate U.S. antitrust law.[6] Central to this determination

The views and opinions expressed in this article are those of the authors only.
Nadia Alhadi
Vol. 39 Managing Articles Editor
Since the start of the Myanmar military’s targeted attacks against the Rohingya, the international community – both individual States and the United Nations – has been reluctant to call out the violence as an act of genocide. Both in this instance and in other targeted campaigns, it is imperative that the international community become more willing to call such acts out.

The evidence of a campaign of genocide is clear. Since August 2017, more than 650,000 Rohingya have fled to Bangladesh to escape the Myanmar military’s violent efforts to drive these individuals away from the area. Myanmar security forces, sometimes working in concert with local vigilantes, have encircled Rohingya villages in the northern part of the Rakhine State.[1] Soldiers and police officers open fire on the Rohingya men, women, and children attempting to flee the violence, killing or seriously injuring hundreds of people.[2]

Military personnel have set fire to Rohingya homes, burning to death those unable to escape, particularly the elderly and disabled.[3] They have laid mines at the border crossings used by Rohingya refugees attempting to flee violence,[4] and conducted a “scorched earth campaign,”

Thomas Bourneuf
Vol. 39 Associate Editor
Terrorist financing is the process by which terrorists fund their operations in order to perform terrorist acts. These funds can be used for several broad categories, including operations, propaganda, compensation, and providing social services to local communities.[1] Though dissimilar from tax evasion and money laundering, terrorist financers of­ten exploit similar weaknesses within the financial system to fulfil their objectives, a key weakness being the secrecy of various forms of financing.[2] Though the topic is important given the potential to save lives, there are numerous strategic and administrative barriers which have prevented meaningful progress in combating terrorist financing, despite international efforts.

Framing the Issue

Like many forms of financial misbehavior, secrecy is key to the success of terrorist financing. This secrecy can occur in many forms but is perhaps most potent in the form of the secrecy of anonymity.  This anonymity can result from (I) the liquidity, fungibility, and transportable nature of certain assets, (II) the often-small amounts of money being involved, and (III) the rise of self-financed terrorism.

There are certain assets which, because of their nature, are well suited to financing terrorism. For example, diamonds are highly liquid (i.e. easy to convert to cash), fungible (i.e. interchangeable to

The views and opinions expressed in this article are those of the authors only.
Maya Jacob
Vol. 40 Managing Editor, Online

The world is currently facing the highest levels of human displacement ever recorded.[1] Those fleeing armed conflict, natural disaster, and persecution are estimated to number in the millions, many of whom are children.[2] In the face of this heightened need, President Trump signed an executive order in January 2017 barring U.S. entry by citizens from seven Muslim-majority countries.[3] Additional countries with minimal Muslim populations have since been banned.[4]

Since the executive order went into effect, it has been the source of constant litigation in federal courts.[5] In a 7-2 vote in December 2017, the U.S. Supreme Court said it would permit the travel ban to stay in place, at least until it hears oral argument on the issue in April.[6]

While the “Muslim Ban” and the DREAMers’ uncertain future have gotten the most immigration-related media attention, President Trump has also begun to dismantle the U.S.’s refugee policy. The U.S. has a long history of protecting persecuted individuals by providing asylum, but during the 2018 State of the Union, Trump announced plans to lower the cap on refugee admissions to 45,000—the lowest number since the

The views and opinions expressed in this article are those of the authors only.
Robert Kuhn
Vol. 40 Articles Editor
As vitally interlinked partners, the United States and China form one of the largest trading partnerships in the world. Total trade between the two states is worth an astounding $578.6 billion.[1] This vital trade relationship brings prosperity to both countries. However, many studies have reported troubling signs of Chinese economic espionage.[2] To sustain a healthy Chinese-American trading relationship, the United States should confront this problem through a World Trade Organization (WTO) complaint, not unilateral tariffs.

The politics of trade are especially difficult to maneuver. For free trade to be successful, as a practical matter, it must be perceived as fair by the relevant body politics. The very nature of free trade is disruptive: It dislocates long-standing domestic industries, leaving many previously thriving communities without a vital source of economic growth.[3] The disruptive impact of free trade has the potential to leave workers displaced with strong feelings of resentment.[4] This has a significant impact on trade policy because these losses can be concentrated in specific regions and specific industries while the benefits of free trade, usually in the form of enhanced competition, are dispersed.[5] In

The views and opinions expressed in this article are those of the authors only.
Hunter Davis
Vol. 39 Notes Editor
In the wake of the UK’s withdrawal from the European Union (“Brexit”), a challenge to British sovereignty over Gibraltar has emerged. On April 29, 2017, the European Council unanimously adopted the Framework for Negotiations Under Article 50 (“the Framework”).[1] While the bulk of the Framework lays out broad goals and timelines, the Framework also requires the UK to pre-clear with Spain any agreements relating to Gibraltar before taking them up with the EU.[2] This has been referred to as the “Spanish veto.”

This provision has been the cause of great controversy. Members of European Parliament (MEP) including Isabella De Monte, claim that Clause 24 is illegal. [3] Experts have also suggested that the European Court of Justice (ECJ) could rule that the veto is in breach of EU law.[4] The crux of this argument is that the veto would give Spain special status among EU nations without sufficient objective justification. This conflicts with the fundamental principle of Member State equality.[5]
Grounding Member State Equality in EU Law
Member State equality has emerged from a variety of sources. Borrowing heavily from equality and anti-discrimination precedents, the ECJ

The views and opinions expressed in this article are those of the authors only.
Lukas Kutilek*
The international tax regime as we know it today goes back to the beginning of the twentieth century. In 1923, the League of Nations reached a compromise on dividing the tax base between residence and source jurisdiction, which is usually called the Benefits Principle. Put simply, the Benefits Principle is the idea that active income should be taxed primarily at source and passive income should be taxed primarily at residency.[1] This principle is already embedded in the network of over 3,000 bilateral double tax treaties (“DTTs”). But the League of Nations also agreed on one other key principle of international tax regime. This second principle, sometimes called the Single Tax Principle, holds that although income should not be taxed twice, it should also not escape taxation altogether. The often-quoted language of the League of Nations states that:
“From the very outset, [the drafters of the model convention] realized the necessity of dealing with the questions of tax evasion and double taxation in co-ordination with each other. […] The most elementary and undisputed principles of fiscal justice, therefore, required that the experts should devise a scheme whereby all

The views and opinions expressed in this article are those of the authors only.
Gianluca Darena*
On June 7, 2017, seventy-one jurisdictions signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("MLI")[1] with the promise to thwart base erosion and profits shifting practices.[2]  On October 13, 2017, academics, experts, and practitioners from all over the world gathered at the University of Michigan Law School to debate about these recent developments that could potentially redefine the international tax regime (“Conference”).[3] 

Throughout the Conference, much attention was focused on the MLI’s dispute resolution mechanisms. Specifically, Part V of the MLI addresses the Mutual Agreement Procedure (“MAP”), while Part VI addresses the mandatory binding arbitration process.[4]

At the outset of the Conference, Professor Pasquale Pistone[5] engaged in an insightful comparison between the dispute resolution mechanisms in the MLI and under the new European Union (“EU”) Arbitration Directive.[6]  Specifically, Pistone argued that the fundamental difference between the EU and the OECD approach is that the EU Arbitration Directive considers taxpayers as “holders of rights”[7], while the MLI’s framework treats taxpayers only as “objects.” In other words, the E.U. Arbitration Directive aims to regulate States’ relationships as well as taxpayers’ rights,

The views and opinions expressed in this article are those of the authors only.
Eran Levy*
A summary and opinion on the session “Article 7 and Prevention of Treaty Abuse” by Mr. Richard Reinhold[1] and Prof. Reuven Avi-Yonah[2] as commentator (the “Session”), which took place at the “Perspective on the Multilateral Instrument” conference at the University of Michigan Law School on October 13, 2017.


There is considerable debate on which type of anti-abuse rules should be used in the OECD Multilateral Instrument (the “MLI”).[3] The two types of anti-abuse rules which were discussed in the Session were (1) the “Limitation of Benefits” (“LOB”) provisions, which are used by the United States in its bilateral tax treaties,[4] and the Simplified LOB, currently offered in the MLI, and (2) the “Principal Purpose Test” (“PPT”), which is the default anti-abuse rule offered in the MLI.

Generally, LOB tests limit the availability of treaty benefits to entities that meet certain conditions based on legal nature, general activities, and ownership. These conditions seek to ensure that there is a sufficient link between the entity and its state of residence.[5] For example, according to the Simplified LOB provisions offered in the MLI, generally speaking, if at least fifty percent of

The views and opinions expressed in this article are those of the authors only.
Chul Hun Lee*
Vol. 39 Associate Editor
Article 7 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (“MLI”) requires the signatories to adopt measures to meet the minimum standard to prevent treaty abuse. The baseline approach of Article 7 is the Principal Purpose Test (“PPT”), which denies tax treaty benefits if one of the principal purposes of a transaction was to obtain such benefit under the tax treaty.[1] Furthermore, Article 7 is not an elective provision; all signatories must implement the measures provided for in the Article.[2] However, this is not as onerous as it may sound. Although the PPT is the only test that can satisfy the minimum standard on its own, it is not the only approach permissible under the MLI. Instead, the signatories are permitted to either supplement the PPT with a simplified Limitations on Benefits rule (“LOB”), or to adopt a detailed LOB in lieu of the PPT.[3] Given these options, is the PPT a better option than the LOB, or is it an IED as Mr. Richard Reinhold[4] suggested?

Perhaps the most significant characteristic of the PPT – and also

On October 13, 2017, tax specialists and international law experts from universities, private practice, and global institutions explored the implications of the recently signed Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The day-long conference was organized at the University of Michigan Law School by Professor Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law and Director of the International Tax LLM Program at Michigan Law. The conference was co-sponsored by the Michigan Journal of International Law.

In this special digital issue, four emerging tax scholars share their perspectives on the issues and debates raised through the conference:

The Multilateral Instrument: A New Array of Questions by Lukas Kutilek
The Dispute Settlement Mechanisms Under the MLI: A Work in Progress by Gianluca Darena
Is the Principal Purpose Test an “Atomic Bomb” and should it be used against Treaty Abuse? by Eran Levy
Principal Purpose Test Needs Time by Chul Hun Lee

Lukas Kutilek is a JD candidate at the University of Michigan Law School and holds a JD equivalent, summa cum laude, from the Charles University in Prague. In the past, he has practiced tax law in Prague at Dentons, Ernst & Young, and PDF CZ.

William Yau
Vol. 39 Associate Editor
As an innovative development in the area of international tax treaties, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) will provide a method to strengthen existing tax treaties to protect against tax avoidance strategies without the burden of bilaterally renegotiating each individual treaty.[1] With the treaty poised to enter into force in the coming months, it could also help address other international treaty issues by serving as a basic framework model.

Tax treaties have been in existence since the late nineteenth century, having been found essential to avoid or mitigate double taxation.[2] These treaties can cover a wide range of taxes and typically reduce taxes of one treaty country for residents of the other treaty country.[3] Unfortunately, these treaties now clearly show their age, with international tax standards no longer reflective of changes in global business practices, particularly with regard to development of intellectual property and the digital economy.[4] These gaps have created opportunities for multinational corporations to be increasingly aggressive in using strategies designed to reduce their tax liability.[5] For example, multinational corporations based in high-tax regimes can create numerous off-shore subsidiaries to take advantage of tax

Sarah Syed
Vol. 39 Associate Editor
Myanmar, formerly known as Burma, has been under close watch for its human rights abuses.[1] In 2012, the Myanmar military rounded up thousands of Rohingya into ghetto-like camps with deplorable conditions in the Rakhine state.[2] The Rohingya are a Muslim ethnic minority group of Bangladeshi descent.[3] On top of being excluded from citizenship and all forms of legal existence, many Rohingya are detained and forced to seek refuge in neighboring countries.[4] Major international organizations hold a firm stance that there is evidence that ethnic cleansing of Rohingya and that genocidal acts are being perpetrated under the government, which recently transitioned from a military dictatorship to democracy.[5] The socio-political history of Rohingyas in Myanmar, as well as U.S. influence on Myanmar’s democratization, explain why the violence against Rohingyas occurs without significant international intervention.[6] As the international community stands by, the Rohingya in Internally Displaced Persons (IDP) camps face harsh conditions and ongoing threats of violence, resulting in a refugee crisis.[7]

Socio-Political History of Rohingyas

The long-persecuted Rohingya are excluded from Myanmar’s political process.[8] In 1982, the military government of Myanmar, known as Burma at the time, enacted a Citizenship Law that revoked Rohingya citizenship.[9]

The Rohingya were forced into

Sara Stappert
Vol. 39 Associate Editor
June 27, 2017 was a dark day for tech giant Google as European Union (EU) antitrust officials fined the company “a record $2.7 billion for unfairly favoring some of its own services over those of rivals.”[1] The antitrust decision was specifically targeted at Google’s online shopping service. It is alleged that Google promoted Google Shopping in organic search results[2] while simultaneously demoting rival services in 13 of the 31 countries in the European Economic Area.[3] The Commission specifically objected to the fact that Google leveraged its marked dominance in general Internet search into a separate market: comparison-shopping.[4]

The penalty showcases just how aggressive European officials are in regulating technology companies. The fine has allowed the EU to lay claim to “being the Western world’s most active regulator of digital services, an industry dominated by Silicon Valley.”[5] While the fine announced in June is minuscule as compared with Google’s $90 billion in annual revenue, it has had drastic effects as Google’s stock declined 2.5 percent on the day the fine was announced, and Google will have to modify its search engine and algorithms in order to comply with the fine.[6]

A company like Google, with global reach, plays a

Gianluca Scaglione
Vol. 39 Associate Editor
Now more than ever, privacy and its cybersecurity dimension demand increased attention. As digital technology and its uses expand rapidly, the amount of data generated about every individual is staggering: from our real-time movement location to texts and emails, almost everything we do is encapsulated on a daily basis in the devices we use. In the face of rapid technological development—situated as we are at the dawn of the Internet era—current legal protections have proven lackluster and adequate norms have yet to be conceived.

Part of the problem lies in the current cultural perception of cybersecurity and privacy. Notwithstanding the pervasiveness of technology and the accelerating amount of data collected about each individual, privacy is often overlooked or disregarded on the spectrum of today’s social goals. “Why do you care? What do you have to hide?” is often the response to requests for increased data protection.

Privacy, however, means the ability to control information disclosed about oneself.[1] As such, privacy should be seen as an essential component of the freedom of speech. It should be understood as a rightful expression of one’s own persona—and not as a suspect assertion of secrecy.[2]

Moreover, protecting privacy is the only way to

Peter Liu
Vol. 39 Associate Editor
China revealed in the 19th Party Congress the new members of the Politburo Standing Committee. This Congress heralds the beginning of President Xi Jinping’s second five-year term. During a president's first term, the members of this Committee are holdovers from the previous administration, appointed by the outgoing leader. It is during the second term that a president is fully empowered to pursue his own agenda, as he fills the Politburo Standing Committee with his own allies.

While former leaders typically identify a successor from among these new appointments, Xi Jinping has not made any such indication.[1] Experts have speculated that Xi may seek to change the party constitution and pursue a third term. Regardless, Xi has fully consolidated his power and cemented his position as China's strongest leader since Deng Xiaoping.[2] President Xi now has the political capital to double down on his vision of China as a global power. As he made clear during his three-hour address to the Party Congress, he sees this moment as “a new historic juncture in China’s development”—and himself as the man to seize it.[3]

Xi’s desire to achieve the “China Dream,” defined as the “great rejuvenation of the Chinese nation,” is

David Smellie & Zachary Simon
Vol. 39 Associate Editors
History and Overview of the TPP
Signed in February 2016, the Trans-Pacific Partnership (TPP) was meant to be a watershed moment for trade in the Pacific. The twelve signatories to the agreement, all of whom border the Pacific Ocean, collectively account for 40 percent of global GDP and one-third of global trade.[1] The goal of the agreement was straightforward: to strengthen economic ties between Pacific nations by slashing tariffs and boosting trade. In fact, it was crafted with the eventual goal of creating a single market between the signatory countries.[2] The TPP was also widely seen as a measure to counter the rising influence of China in the region.

The TPP was notable for its labor and environmental protections. Specifically, it required consistency plans for Vietnam, Malaysia, and Brunei, which all have spotty labor records.[3] For the most part, the plans make it easier for workers to form unions, strengthen protections against discrimination in the workplace, and improve rights for migrant and temporary workers. In addition to its labor protections, the agreement also restricts trade in illegal wildlife, includes provisions to combat deforestation and overfishing, and redoubles each country’s commitment to conservation efforts.[4]

That the agreement

Sara Shea
Volume 39 Associate Editor
The Rana Plaza building in Bangladesh was home to five garment factories that manufactured goods for European and North American retail companies.[1] In 2013, this eight-story building collapsed, killing more than one-thousand people and injuring thousands more.[2] The building was unfit for the garment industry: the construction’s poor quality and the swampy land it stood on could not withstand the massive, heavy equipment weighing on each of the floors.[3] The disaster is one of many that highlights the human rights abuses that go unnoticed throughout global supply chains, including apparel and footwear brands. And these abuses are not limited to poor and hazardous working conditions; they range from the more direct forced overtime and anti-union abuses to indirect violations, such as corporate land deals that resettle local communities into areas where water and food are scarce.[4] Until the UN adopts binding due diligence obligations for companies, human rights abuses will continue to flourish throughout global supply chains.

Global supply chains are almost inherent in modern business. As our world becomes increasingly globalized, companies readily seek to outsource certain parts of their business, such as manufacturing. The International Labour Organization (ILO) has documented this expansion: the ILO reports

Han Zhu
Vol. 39 Executive Editor
On June 30, 2017, the spokesman of the Chinese Foreign Ministry, in a retort to foreign statements regarding the political conditions of Hong Kong, said the Sino-British Joint Declaration, which laid the groundwork for Hong Kong’s handover, is a “historical document that no longer has any realistic meaning.”[i] Not only did this statement immediately raise concerns about China’s 50-year promise of the so-called “one country, two systems” framework implemented in Hong Kong, it also cast doubt on China’s future commitment to international law at large.

In 1842, Hong Kong was officially ceded to the then British Empire in accordance with the terms in the Treaty of Nanjing following a humiliating defeat of the Qing Dynasty, then ruler of imperial China, in the First Opium War.[ii] The territory of British Hong Kong further expanded to include the Kowloon Peninsula in 1860, and the “New Territories” in 1898.[iii] In 1984, after rounds of negotiation between Beijing and London, the Sino-British Joint Declaration (“the Declaration”) was signed and went into force in 1985.[iv] The Declaration was registered by both the People’s Republic of China and United Kingdom governments at the United Nations on June 12, 1985.[v] Therefore, the Declaration is

Layne Smith
Vol. 39 Associate Editor
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) is a tax convention drafted by the Organisation for Economic Cooperation and Development (OECD) that sets out several substantive provisions aimed at reducing the loss of tax revenues caused by multinational companies artificially shifting profits to lower-tax jurisdictions.[1] The impact of successful implementation of the measures contained in the MLI would likely be especially pronounced in Europe, which is home to several holding company jurisdictions – that is, jurisdictions with generally favorable treatment of corporate income tax where multinational corporations choose to incorporate in order to artificially reduce their tax liability. Should the various provisions of the MLI be implemented by European countries, it could strongly deter jurisdiction-shopping by multinationals, and serve to more successfully pursue the goals laid out in the MLI, namely the prevention of base erosion and profit-shifting by multinational companies taking advantage of gaps and loopholes in various tax treaties to artificially lower their tax liabilities.

But how much impact will the MLI actually have? More specifically, what impact will the anti-profit-shifting provisions of the MLI have in Europe? A potential obstacle to the MLI’s goals,

Jens Thomsen
Vol. 39 Associate Editor
The Rohingya, a stateless, predominantly Muslim ethnic group, are victims of persecution being carried out in the western border state of Rakhine by Myanmar’s military forces.[1] It is the fastest-growing ongoing refugee crisis—since late August of this year, 615,500 refugees have fled to Bangladesh to escape execution, rape, and arson.[2] Although Myanmar’s government has made it difficult for human rights investigators to assess the situation, the United Nations (UN) High Commissioner for Human Rights has stated that it seems to be a “textbook case of ethnic cleansing.”[3] Satellite images have shown entire villages wiped out by fires set by Myanmar’s military forces.[4] The Buddhist majority in Myanmar has deeply negative views of the Rohingya.[5] Most do not see them as part of the Burmese nation, but as illegal immigrants from Bangladesh.[6] This has put Nobel Peace Prize winner Aung San Suu Kyi in a difficult position as Myanmar’s de facto leader.

Aung San Suu Kyi, placed under house arrest for 15 years by the reigning military junta until 2010, has been the subject of increasing criticism from the international community for her reticence to condemn the military’s actions.[7]  The criticisms are made all the more earnest by

Cite: Reuven S. Avi-Yonah, Altera, the Arm’s Length Standard, and Customary International Tax Law, 38 MJILOpinioJuris 1 (2017), http://www.mjilonline.org/altera.


Reuven S. Avi-Yonah*
Irwin I. Cohn Professor of Law, the University of Michigan 
The recent Altera case in the US Tax Court (on appeal to the Ninth Circuit) raises interesting issues in regard to the much-debated topic of whether customary international tax law (CITL) exists. Altera involved the question whether the cost of employee stock options should be included in the pool of costs that must be shared under a cost sharing agreement. In Xilinx, the Ninth Circuit held under a previous version of the regulations that these costs should not be included because unrelated parties operating at arm’s length would not have agreed to include them. Treasury then amended the regulation to state specifically that “all” costs includes the cost of stock options but did not carve out an exception from the arm’s length standard. In Altera, the Tax Court sitting en banc invalidated the new regulation on the ground that it was inconsistent with the arm’s length standard (ALS). This article-in-abstract discusses the implications of Altera for the long-running debate about whether CITL

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